Sell #3 -- National Healthcare (NHC)

I made my third of at least four sales on Friday afternoon, selling National Healthcare Corp (NHC) at $42.25.

This one became a sell target for a few reasons:

First, and most importantly, it was a small position and I've been deciding that I'll try to reevaluate most of my smaller holdings and sell those that I'm not interested in adding to.

Second, while I think this is a growth industry in the long term (nursing homes), and a decent company, I don't think that earnings should climb all that quickly, the shares are not particularly bargarin priced at this point, and the dividend, while growing, is still puny.

I'm satisfied with my 20% gain and don't think the shares should climb dramatically over the next few years. It's possible that I'll miss a big boost if this small company gets bought out by one of the larger players in the industry, but with large insider ownership and a tight relationship with the REIT that owns their properties that doesn't seem all that likely to me. This is a small and sleepy company, I don't see many negatives but nor do I want to up my investment here ... so I'll take my gain and get out so I can consolidate my funds into some companies that I feel are better opportunities.

I still plan to sell at least one more stock from my too-broad portfolio over the next short period, though it's a little more difficult with the market hemmorrhaging cash at the moment. Now that I've generated some cash with these sales I'll be looking to make follow on purchases in some of the companies I already hold if this downturn in the market brings some bargain prices to the surface.

Keep up with One Guy's Investments, Free Subscription
Enter your email address:

Delivered by FeedBurner

Annual Checkup -- NHC

I don't believe I've ever actually mentioned my holdings in National Healthcare Corp. (NHC -- click to register for free RT streaming quote) on this site, though it has been in my portfolio for close to a year. This is a relatively small manager of health care facilities and services, mostly in the South, and I bought it because it was flying under the radar as a small cap AMEX stock (and was therefore cheaper than some of the big companies, like Sunrise) but is in an important business that I think should see continued dramatic growth. The company operates nursing homes and rehabilitation centers, as well as providing in-home care and similar services. They generally don't own the actual buildings, the real estate is held by a related company called National Health Investors (NHI) that trades as a REIT and is managed by more or less the same folks -- not unlike the strategies hotels have been following lately. NHC stock yields a small amount, and generally is not a fast mover -- some recent bumps on upgrades by minor analysts (the only ones who follow them) have brought notice, and they had a little trouble with the AMEX lately due to some registration mishaps that appear to have been totally insignificant. I am content to leave this company largely unwatched, and enjoy it's slow and steady advance as the population ages and the demand for their services skyrockets -- I expect they'll grow at a measured pace, and that the strong roster of insider owners will keep a good eye on their money for me. I purchased my shares last February at $34.20 and don't plan to buy or sell any of this one, though I may consider other investments in this sector if the bigger players ever reach good valuations.

Keep up with One Guy's Investments, Free Subscription
Enter your email address:

Delivered by FeedBurner